iConViz: Interactive Visual Exploration of the Default Contagion Risk of Networked-Guarantee Loans

Groups of enterprises can serve as guarantees for one another and form complex networks when obtaining loans from commercial banks. During economic slowdowns, corporate default may spread like a virus and lead to large-scale defaults or even systemic financial crises. To help financial regulatory authorities and banks manage the risk associated with networked loans, we identified the default contagion risk, a pivotal issue in developing preventive measures, and established iConViz, an interactive visual analysis tool that facilitates the closed-loop analysis process. A novel financial metric, the contagion effect, was formulated to quantify the infectious consequences of guarantee chains in this type of network. Based on this metric, we designed and implemented a series of novel and coordinated views that address the analysis of financial problems. Experts evaluated the system using real-world financial data. The proposed approach grants practitioners the ability to avoid previous ad hoc analysis methodologies and extend coverage of the conventional Capital Accord to the banking industry.